LG Chem, the country's biggest chemical firm, said Tuesday that it has decided to scrap a plan to jointly build a $4.2 billion petrochemical plant in Kazakhstan due to the continued slump in oil prices.

"The Kazakhstan project lost its luster because of a steep increase in facility investment amid growing uncertainty. On a business front, LG's top management reached a consensus that it wasn't promising," the company said in a statement after the stock market closed.

The decision came five years after the LG Group affiliate signed an agreement with the Kazakhstan government-owned UCC and a private company SAT to jointly invest $4.2 billion to construct a polyethylene complex to produce 800,000 tons a year, near the western Kazakh city of Atyrau.

LG Chem also added that its plan to invest in polysilicon, a key part to manufacturing solar cells, had also been scrapped due to the worsening market situation. LG Chem's polysilicon investment project has been put on hold since the company announced the plan in June 2011.

"LG Chem has no option but to invest in businesses that are more promising and have growth potential. The money that will be saved from the exits will be used to strengthen the company's strength in electric vehicle batteries, filters and agricultural chemicals, which we've identified as new revenue streams," C.S. Song, head of LG Chem's public relations office, said.